KARACHI: The Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) has further revised the policy rate to 11 per cent after a 150 basis points cut.
The decision is the second rate cut within a fortnight. The central bank had announced a 7.5 bps decrease in policy rate bringing it to 12.5 per cent on March 17. The MPCs in its official statement has said that the decision is in line to deal with the increasingly growing impact of COVID-19, uncertainty in inflation and growth rate, major disruptions in economic activity and IMF’s slash in its global outlook growth outlook to below zero from 3.3 per cent in 2020. The downgrading of growth outlook has caused impediment in international trade.
The COVID-19 has been growing exponentially since January this year. MPC has further said that the recent and cumulative easing over the past week stands at 225 basis point. The committee says that the easing is expected to cushion the growth slowdown and provide the economy protection against inflation.
The official statement also says that SBP is on its way to take necessary regulatory measures to address the cash flow pressures on banks and COVID-19 related disruptions through facilitating deferment and restructuring of loans.
These measures will be announced soon to complement the decision of interest rate cut.